Emdeon Reports Fourth Quarter and Full Year 2012 Results --Fourth Quarter 2012 Revenue of $300.7 million and Adjusted EBITDA of $78.7 million

--Full Year 2012 Revenue of $1.178 billion and Adjusted EBITDA of $316.4 million

NASHVILLE, Tenn., March 18, 2013 /PRNewswire/ -- Emdeon Inc., a leading provider of healthcare revenue and payment cycle management and clinical information exchange solutions, today announced financial results for the fourth quarter and year ended December 31, 2012, as summarized below:

 







Combined









Combined





(In millions)


4Q 12



4Q 11



% Change



FY 12



FY 11



% Change


Revenue

$

300.7


$

283.9



5.9%


$

1,178.3


$

1,119.6



5.2%


Net Income (Loss)

$

(10.2)


$

(70.0)



85.4%


$

(78.3)


$

(36.3)



-115.9%


Non-GAAP Adjusted EBITDA

$

78.7


$

80.3



-2.0%


$

316.4


$

300.5



5.3%

 

"During the first full year following our acquisition by Blackstone, Emdeon achieved solid financial results and made tremendous progress in establishing a firm foundation for our future growth," said George Lazenby, chief executive officer for Emdeon. "Of particular note, we saw volumes steadily improve across Emdeon's entire business during the second half of 2012, and our pharmacy business and payment integrity solutions continued to perform very well. We are excited about continuing to execute on our growth strategy in 2013."

Fourth quarter 2012 revenue was $300.7 million, an increase of 5.9%, compared to $283.9 million for the same period in 2011. Net loss for the fourth quarter of 2012 was $10.2 million compared to $70.0 million for the same period in 2011. This improvement in net loss compared to the corresponding prior year period was primarily due to the impact of business growth and reduced transaction costs and expenses in the fourth quarter of 2012 associated with the November 2011 acquisition of Emdeon by affiliates of Blackstone and the related financing. These two factors were partially offset by increased interest, depreciation and amortization expense in the fourth quarter of 2012 related to the Blackstone transactions.

Fourth quarter 2012 Non-GAAP Adjusted EBITDA decreased 2.0% to $78.7 million, or 26.2% of revenue, from Non-GAAP Adjusted EBITDA of $80.3 million, or 28.3% of revenue, for the comparable period in 2011. This decline was primarily due to one less business day in the fourth quarter of 2012 and additional investments in sales and other initiatives to support our growth strategy.

For the year ended December 31, 2012, revenue was $1,178.3 million compared to $1,119.6 million for 2011, an increase of 5.2%. Net loss for full year 2012 was $78.3 million compared to $36.3 million in full year 2011. The 2012 net loss was primarily due to increased interest, depreciation and amortization expense related to the Blackstone transactions, partially offset by the impact of business growth.

Full year 2012 Non-GAAP Adjusted EBITDA increased 5.3% to $316.4 million, or 26.9% of revenue, from Non-GAAP Adjusted EBITDA of $300.5 million, or 26.8% of revenue, for the comparable period in 2011. This increase was primarily due to the impact of business growth.

A reconciliation of Emdeon's financial results determined in accordance with U.S. Generally Accepted Accounting Principles (GAAP) to certain non-GAAP financial measures has been provided in the financial statement tables included in this release to supplement its unaudited condensed consolidated financial statements presented on a GAAP basis.  An explanation of these non-GAAP measures is also included below under the heading "Explanation of Non-GAAP Financial Measures."

About Emdeon

Emdeon is a leading provider of revenue and payment cycle management and clinical information exchange solutions, connecting payers, providers and patients in the U.S. healthcare system. Emdeon's offerings integrate and automate key business and administrative functions of its payer and provider customers throughout the patient encounter. Through the use of Emdeon's comprehensive suite of solutions, which are designed to easily integrate with existing technology infrastructures, customers are able to improve efficiency, reduce costs, increase cash flow and more efficiently manage the complex revenue and payment cycle and clinical information exchange processes. For more information, visit www.emdeon.com.

Forward-Looking Statements

Statements made in this press release that express Emdeon's or management's intentions, plans, beliefs, expectations or predictions of future events are forward-looking statements.  These statements often include words such as "may," "will," "should," "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions.  Forward-looking statements may include information concerning Emdeon's possible or assumed future results of operations, including descriptions of Emdeon's revenues, profitability, outlook and overall business strategy.  You should not place undue reliance on these statements because they are subject to numerous uncertainties and factors relating to Emdeon's operations and business environment, all of which are difficult to predict and many of which are beyond Emdeon's control.  Although Emdeon believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Emdeon's actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements.  Such factors related to Emdeon's actual financial results or results of operations include:  effects of competition, including competition from entities that are customers for certain of Emdeon's solutions; Emdeon's ability to maintain relationships with its customers and channel partners; Emdeon's ability to effectively cross-sell its solutions to existing customers and to continue to generate revenue and maintain profitability by developing or acquiring and successfully deploying new or updated solutions; pricing pressures on Emdeon's solutions; the anticipated benefits from acquisitions not being fully realized or not being realized within the expected time frames; and general economic, business or regulatory conditions affecting the healthcare information technology and services industries; as well as the other risks discussed in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections and elsewhere in Emdeon's Registration Statement on Form S-4 (File No. 333-182786) and the accompanying Prospectus thereto, as well as Emdeon's periodic and other reports, filed with the Securities and Exchange Commission.

You should keep in mind that any forward-looking statement made by Emdeon herein, or elsewhere, speaks only as of the date on which made. Emdeon expressly disclaims any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in Emdeon's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.   


 


Emdeon Inc.


Consolidated Statements of Operations


(unaudited and amounts in thousands)




























































Successor



Predecessor



Combined



Successor



Predecessor



Combined






Three Months



November 2



October 1



Three Months



Fiscal



November 2



January 1



Fiscal






Ended



through



through



Ended



Year Ended



through



through



Year Ended






December 31,



December 31,



November 1,



December 31,



December 31,



December 31,



November 1,



December 31,






2012



2011



2011



2011



2012



2011



2011



2011





























Revenue


$

300,694


$

190,384


$

93,506


$

283,890


$

1,178,271


$

190,384


$

929,264


$

1,119,648


Costs and expenses:



























Cost of operations (exclusive of



























depreciation and amortization below)



188,972



117,421



57,062



174,483



731,525



117,421



572,541



689,962



Development and engineering



7,548



5,153



2,487



7,640



31,794



5,153



26,090



31,243



Sales, marketing, general



























  and administrative



34,805



21,778



10,668



32,446



142,186



21,778



111,463



133,241



Depreciation and amortization



46,871



29,094



11,975



41,069



187,225



29,094



128,761



157,855



Accretion



(6,439)



2,459



-



2,459



8,666



2,459



-



2,459



Transaction related costs



1,250



17,857



61,813



79,670



1,250



17,857



66,625



84,482


Operating income (loss)



27,687



(3,378)



(50,499)



(53,877)



75,625



(3,378)



23,784



20,406




























Interest expense, net



41,714



29,343



5,353



34,696



172,253



29,343



43,201



72,544


Loss on extinguishment of debt



-



-



-



-



21,853



-



-



-


Other



-



(5,843)



-



(5,843)



-



(5,843)



(8,036)



(13,879)


Loss before income tax provision



























(benefit)



(14,027)



(26,878)



(55,852)



(82,730)



(118,481)



(26,878)



(11,381)



(38,259)


Income tax provision (benefit)



(3,781)



(10,185)



(2,533)



(12,718)



(40,146)



(10,185)



8,201



(1,984)


Net loss



(10,246)



(16,693)



(53,319)



(70,012)



(78,335)



(16,693)



(19,582)



(36,275)



Net income attributable to



























  noncontrolling interest



-



-



(4,105)



(4,105)



-



-



5,109



5,109


Net loss attributable to Emdeon Inc.


$

(10,246)


$

(16,693)


$

(49,214)


$

(65,907)


$

(78,335)


$

(16,693)


$

(24,691)


$

(41,384)


 


Emdeon Inc.


Consolidated Balance Sheets


(unaudited and amounts in thousands, except share and per share amounts)


















December 31,


December 31,







2012


2011


ASSETS


Current assets:









Cash and cash equivalents


$

31,763


$

37,925



Accounts receivable, net of allowance for doubtful accounts of $3,585










and $1,201 at December 31, 2012 and December 31, 2011, respectively



190,021



188,960



Deferred income tax assets



4,184



5,614



Prepaid expenses and other current assets



28,160



15,869


Total current assets



254,128



248,368


Property and equipment, net



272,088



277,768


Goodwill



1,481,889



1,443,574


Intangible assets, net



1,730,089



1,821,897


Other assets, net



29,694



40,460


Total assets


$

3,767,888


$

3,832,067











LIABILITIES AND EQUITY


Current liabilities:









Accounts payable


$

6,223


$

8,827



Accrued expenses



102,069



132,096



Deferred revenues



9,342



4,671



Current portion of long-term debt



17,330



16,034


Total current liabilities



134,964



161,628


Long-term debt, excluding current portion



1,999,392



1,945,074


Deferred income tax liabilities



467,912



501,796


Tax receivable agreement obligations to related parties



125,003



117,477


Other long-term liabilities



8,466



2,303


Commitments and contingencies








Equity:









Common stock (par value, $.01), 100 shares authorized, issued and










outstanding at December 31, 2012 and December 31, 2011, respectively



-



-



Additional paid-in capital



1,130,968



1,120,676



Accumulated other comprehensive loss



(3,789)



(194)



Accumulated deficit



(95,028)



(16,693)


Total equity



1,032,151



1,103,789


Total liabilities and equity


$

3,767,888


$

3,832,067


 


Emdeon Inc.


Consolidated Statements of Cash Flows


(unaudited and amounts in thousands)























Successor



Predecessor






Fiscal


November 2



January 1


Combined






Year Ended


through



through


Year Ended






December 31,


December 31,



November 1,


December 31,






2012


2011



2011


2010


Operating activities
















Net Income (loss)


$

(78,335)


$

(16,693)



$

(19,582)


$

33,167



Adjustments to reconcile net income (loss) to net cash

















provided by (used in) operating activities:

















Depreciation and amortization



187,225



29,094




128,761



124,721




Equity compensation expense



6,842



-




54,932



17,721




Deferred income tax expense (benefit)



(38,447)



(6,397)




(15,045)



12,236




Accretion expense



8,666



2,459




-



-




Loss on extinguishment of debt



18,293



-




-



-




Amortization of debt discount and issuance costs



10,185



1,642




11,673



12,911




Amortization of discontinued cash flow hedge from other

   comprehensive loss



-



-




-



5,800




Amortization of interest rate swap



-



-




3,167



-




Change in fair value of interest rate swap (not subject to

















   hedge accounting)



-



(2,755)




(7,983)



(3,908)




Change in contingent consideration



-



(5,843)




(8,036)



(9,284)




Other



2,685



489




1,119



419



Changes in operating assets and liabilities:

















Accounts receivable



1,601



(13,447)




660



(2,429)




Prepaid expenses and other



(12,096)



3,126




6,638



(12,552)




Accounts payable



(2,149)



(2,912)




8,505



(7,499)




Accrued expenses, deferred revenue, and other liabilities



(25,218)



(17,544)




47,613



451




Tax receivable agreement obligations to related parties



(334)



-




(3,519)



95


Net cash provided by (used in) operating activities



78,918



(28,781)




208,903



171,849


Investing activities
















Purchases of property and equipment



(62,054)



(8,279)




(51,902)



(79,988)



Payments for acquisitions, net of cash acquired



(59,011)



-




(39,422)



(251,464)



Purchase of Emdeon Inc, net of cash acquired



-



(1,943,218)




-



-



Other



-



-




-



(3,000)


Net cash used in investing activities



(121,065)



(1,951,497)




(91,324)



(334,452)


Financing activities
















Proceeds from issuance of stock



-



863,245




-



306



Proceeds from Term Loan Facility



-



1,185,114




-



-



Proceeds from Revolving Facility



-



25,000




-



-



Proceeds from Senior Notes



-



729,375




-



-



Payments on Revolving Facility



(15,000)



(10,000)




-



-



Payment of debt issue costs



(2,060)



(35,901)




-



-



Proceeds from incremental term loan



70,351



-




-



97,982



Debt principal and data sublicense obligation payments



(16,613)



(942,138)




(10,128)



(11,423)



Repayment of assumed debt obligations



-



-




-



(35,254)



Other



(693)



(2,868)




(263)



(1,819)


Net cash provided by (used in) financing activities



35,985



1,811,827




(10,391)



49,792


Net increase (decrease) in cash and cash equivalents



(6,162)



(168,451)




107,188



(112,811)


Cash and cash equivalents at beginning of period



37,925



206,376




99,188



211,999


Cash and cash equivalents at end of period


$

31,763


$

37,925



$

206,376


$

99,188


 

Explanation of Non-GAAP Financial Measures

Emdeon's management believes that, in order to properly understand Emdeon's short-term and long-term financial trends, investors may wish to consider the impact of certain non-cash or non-operating items, when used as a supplement to financial performance measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP).  These items result from facts and circumstances that vary in frequency and/or impact continuing operations.  In addition, management uses results of operations before such excluded items to evaluate the operational performance of Emdeon as a basis for strategic planning and as a performance evaluation metric in determining achievement of certain executive and management incentive compensation programs.  Investors should consider these non-GAAP measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with GAAP.  In addition to the description provided below, reconciliations of GAAP to non-GAAP results are provided in the financial statement tables included in this release.

In this release, Emdeon defines Adjusted EBITDA as EBITDA (which is defined as net income before income tax provision (benefit), net interest expense and depreciation and amortization), plus certain other non-cash or non-operating items (collectively, "EBITDA Adjustments").

To properly evaluate Emdeon's business, Emdeon encourages investors to review the GAAP financial information included in this release, and not rely on any single financial measure to evaluate Emdeon's business.  Emdeon also strongly encourages investors to review the reconciliation of net income (loss) to the non-GAAP measure of Adjusted EBITDA.  Adjusted EBITDA, as Emdeon defines it, may differ from and may not be comparable to similarly titled measures used by other companies, because Adjusted EBITDA is not a measure of financial performance under GAAP and is susceptible to varying calculations.  Adjusted EBITDA calculations are also used in our credit facilities and indentures, although the adjustments used to calculate Adjusted EBITDA as used in our credit facilities and indentures vary in certain respects among such agreements and from those presented below.

Management uses Adjusted EBITDA to facilitate a comparison of Emdeon's operating performance on a consistent basis from period to period that, when viewed in combination with Emdeon's GAAP results, management believes provides a more complete understanding of factors and trends affecting Emdeon's business than GAAP measures alone.  Management believes this non-GAAP measure assists Emdeon's board of directors, management, lenders and investors in comparing Emdeon's operating performance on a consistent basis because it removes where applicable, the impact of Emdeon's capital structure, asset base, acquisition accounting, non-cash charges and non-operating items from Emdeon's operations.


 

Emdeon Inc.

Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited and amounts in thousands)






















Combined













Three Months



Three Months






Combined







Ended



Ended



Year Ended



Year Ended







December 31,



December 31,



December 31,



December 31,







2012



2011



2012



2011

















Net income (loss)


$

(10,246)


$

(70,012)


$

(78,335)


$

(36,275)

Interest expense, net



41,714



34,696



172,253



72,544

Income tax provision (benefit)



(3,781)



(12,718)



(40,146)



(1,984)

Depreciation and amortization



46,871



41,069



187,225



157,855

EBITDA



74,558



(6,965)



240,997



192,140

















Non-2011 Transaction related adjustments:














Equity compensation



2,873



2,036



6,842



19,646


Acquisition-related costs



2,649



3,066



6,913



7,140


Strategic initiatives, duplicative running and transition costs



1,428



2,101



7,020



2,812


Contingent consideration adjustments



-



(5,843)



-



(13,879)


Loss on extinguishment of debt and other related costs



-



-



25,411



-


Other



302



1,416



3,261



2,271

2011 Transaction related adjustments:














Equity compensation



-



35,285



-



35,285


Costs and fees



3,009



44,385



9,908



49,197


Acquisition accounting adjustments



327



2,104



4,697



2,104


Strategic initiatives costs



-



280



2,709



1,349


Accretion expense



(6,439)



2,459



8,666



2,459


EBITDA Adjustments



4,149



87,289



75,427



108,384

















Adjusted EBITDA


$

78,707


$

80,324


$

316,424


$

300,524

 

SOURCE Emdeon Inc.



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